Performing Commercial Inspections by Nick Gromicko and Kenton Shepard

Who’s doing commercial inspections now?

A huge, largely untouched commercial inspection market exists which is completely separate from the residential inspection market! Just Google “commercial building inspections,” and what you’ll find is a small number of inspection companies across North America who perform commercial inspections in addition to residential inspection. Look through their sites, and you’ll find that most approach commercial inspection they way they would a home inspection… the language they use is based on residential inspection… their websites look like those of residential home inspectors… and 95% of them have a “residential inspection” mindset.

What’s the nature of this market?

Not only is this commercial market huge but, on average, commercial clients are less emotional and more reasonable to deal with, and they have deeper pockets. Compared to residential clients, what they require from an inspector are fewer babysitting skills and more professionalism. That’s why the International Association of Certified Home Inspectors (InterNACHI), the world’s largest professional inspection organization, has developed the only comprehensive Commercial Standards of Practice in the inspection industry. “Standards” is a key word. Nowadays, a professional inspector has access to wide-reaching Standards which act as guidelines in steering inspectors through the commercial inspection process.

How are commercial clients different from residential?

Who hires commercial inspectors, and why? As an inspector interested in performing commercial building inspections, you should understand just what it is that differentiates commercial property investors from residential. When inspecting commercial and industrial properties, your clients will consist of businessmen and women who, in their consideration of most properties, will follow an established procedure in evaluating properties. This procedure is much more defined than the comp/appraisal process used for residential transactions, although not necessarily simpler. As opposed to residential processes, foremost in the consideration of purchasing a commercial building are the continuity and stability of the stream of income it has generated in the past, and which it may generate in the future. Determining a building’s potential future income stream is complicated, and it involves examining many physical as well as business aspects of the building offered for sale. This process of examination is called “due diligence.” Remember that term because, as a commercial inspector, a portion of their due diligence is the service that you actually provide to your client.

What is a commercial inspection?

Just as a land developer may hire a general contractor to oversee a variety of subcontractors who actually perform the construction work, a commercial investor often hires an inspector whose responsibilities typically involve overseeing a variety of subcontractors. These subcontractors provide specialty inspection reports on building systems, such as HVAC, electrical, roofing, structure, and whatever else is called for in the Client/Inspector Contract. Although the Standards are available and extremely useful, the goal of a commercial inspection is to provide the client with the information they need to enter into transaction negotiations with as much power in their possession as possible. In a negotiation, knowledge and documentation are power. Gathering this information is the process of due diligence and where commercial inspectors play a key role. The due diligence provided by commercial inspectors will vary, sometimes substantially, with the nature of the transaction. Variables may include building age, type, use and location. Although the client must make the final decision on what services will be supplied, the expertise of the inspector in providing advice and insight may be crucial. Background for providing this advice may require a preliminary inspection by the inspector, the inspector’s subcontractors and, sometimes, the building’s maintenance personnel.